Mortal Kombat game maker seeks bankruptcy

February 13, 2009|By Wailin Wong, Chicago Tribune

CHICAGO -- Midway Games Inc. sought bankruptcy protection from creditors Thursday, the culmination of a chain of events that started when a private investor bought a majority stake in the Chicago-based company last year. That investor appears to be a major beneficiary of Midway's reorganization.

Midway, the creator of the long-running Mortal Kombat franchise, filed Chapter 11 documents in U.S. Bankruptcy Court in Delaware. Operations outside of the U.S. were unaffected. The company said it expects to conduct business as normal during the reorganization.

The road to bankruptcy began at the beginning of December, when media magnate Sumner Redstone sold his 87 percent stake in Midway to Mark Thomas for $100,000 and $70 million in debt.

Midway's shares closed down 36 percent, at 16 cents. The New York Stock Exchange suspended the company's stock Thursday in light of the bankruptcy filing. Before that, the company was in danger of delisting because of its low closing price and market capitalization.

Mortal Kombat vs. DC Universe, the latest iteration of the franchise, has shipped nearly 2 million units since its November release, Booty said. But Midway is entering Chapter 11 with an uncertain outlook on future game development and revenue generation. The company announced in December that it would cut 25 percent of its staff, suspend certain projects and close a studio in Texas.